Markets Defused gives an easy-to-understand and straightforward recap of the week’s most engaging business and stock market news.
- Britvic put in Carlsberg takeover crosshairs
- Dr Martens performance queried by analyst
- NatWest took on Sainsbury’s bank
- Nvidia ‘is the new gold’, analyst says
- Guzman y Gomez ‘best’ Aussie IPO for years
- Golden Goose IPO ditched ‘because France’
- Zilch might ‘float abroad’ instead of London IPO
- Hargreaves Lansdown got an improved takeover bid
- Nvidia and Uber back Waabi AI trucking start-up
Britvic put in Carlsberg takeover crosshairs
Britvic PLC (LSE:BVIC) is the latest British share to find itself in the crosshairs of foreign bidders, with the soft drinks and mixer firm revealing that Danish beer brewer Carlsberg had made a premium priced offer.
The bid, pitched at 1,250p, was unsuccessful with Britvic rejecting the offer and stating that it ‘significantly undervalued the company's worth and future prospects’.
"While there is no guarantee that any takeover will happen, the news is the latest confirmation that there are many overseas companies running the slide rule over UK PLC," said Richard Hunter at Interactive Investor.
Britvic's board was unanimous in its decision to reject Carlsberg, which now faces a deadline of July 19 to submit a firm offer or withdraw its interest entirely.
In London, the shares closed Friday 7.29% higher at 1,089p – having traded as high as 1,181p earlier in the day.
Dr Martens performance queried by analyst
Dr Martens PLC (LSE:DOCS) stock market rating is currently uncertain, according to analysts at Barclays.
The boot maker's direct-to-consumer (D2C) sales channel visibility, particularly in the United States, is seen as crucial for determining its financial outlook.
A recent trading update from Dr. Martens did little to clarify the company's prospects for the remainder of the year. Barclays analyst Richard Taylor highlighted that while some retail market indicators are moderately encouraging, the demand in the U.S. is a critical factor.
“We believe there are a wide range of potential outcomes for financial performance, and believe that observing D2C trends, especially any signs of improvement in the US, will be critical to judge whether a recovery can be achieved, or whether forecasts are still too optimistic," Taylor noted in a report.
In late May, Dr. Martens warned investors about its sales, which it described as “very second-half weighted.” Taylor's analysis on the day of the company's results for the 2024 financial year, released on 30 May, described the numbers as “expectedly poor.” He also pointed out the ongoing weak consumer demand in the United States as a significant factor.
“Given the revenue decline, the company note that FY25 will be 'very second-half weighted, particularly from a profit perspective', and we assume a loss before tax in H1 of £26 million, before a rebound to PBT of £47 million in H2 FY25, vs £50 million in H2 FY24,” Taylor stated.
NatWest took on Sainsbury’s bank
NatWest Group PLC (LSE:NWG) has agreed to take over the operations and assets of Sainsbury's banking business.
The UK supermarket is going to pay Natwest £125 million to take the business which comprises credit cards, personal loans, and saving account units.
Also, Sainsbury's expects to return at least £250 million of excess capital to shareholders.
Meanwhile, the future of Sainsbury-owned Argos Financial Services is under review but it not included in the transaction.
Customer accounts are expected to move over to Natwest in the first half of next year.
“NatWest's values and customer focus are a close fit with ours and as one of the UK's leading banks, NatWest's scale and financial services expertise will ensure our existing financial services customers continue to be well looked after,” Sainsbury chief executive Simon Roberts said.
NatWest is expected to gain around £2.50 billion of gross customer assets and about one million new customer accounts.
NatWest chief executive Paul Thwaite described it as “a great opportunity” to accelerate the growth of its retail banking business, where it sees attractive returns.
“As well as a complementary customer base, the transaction is expected to add scale to our credit card and unsecured personal lending business within existing risk appetite,” Thwaite added.
Sainsbury's Bank's insurance, ATMs, and travel money commission income businesses will continue under the supermarket group's management. "These are capital-light and profitable businesses with a strong connection to Sainsbury's core retail offer," the grocer noted.
Nvidia ‘is the new gold’, analyst says
NVIDIA Corp (NASDAQ:NVDA, ETR:NVD) is being hailed as the AI economy's new precious commodity, according to Daniel Ives, an analyst at Wedbush, who rates the semiconductor firm at ‘outperform.’
Ives described Nvidia founder and CEO Jensen Huang as “the godfather of AI,” noting that Nvidia has recently become the world's most valuable company, surpassing both Apple and Microsoft. These tech giants are now vying to be the first $4 trillion company, driven by the growth in AI.
“Nvidia's GPU chips are in essence the new gold or oil in the tech sector as more enterprises and consumers quickly head down this path with the 4th Industrial Revolution well underway,” Ives said in a note.
Ives also addressed concerns about valuations, stating, “While the bears will continue to harp on valuations of Nvidia, Microsoft, Palantir, MongoDB, ServiceNow, and other AI pure plays, we believe investors that have missed the biggest transformational tech stocks the last decade including Amazon, Netflix, Meta, Apple, Alphabet among many others have dogmatically stuck with the forward PE valuation approach on these unique tech stories.”
He predicts a substantial increase in AI-driven spending, estimating an incremental $1 trillion over the next decade.
Guzman y Gomez ‘best’ Aussie IPO for years
Guzman y Gomez (ASX:GYG), a Sydney-based Mexican restaurant chain, made a soaring stock market debut down-under, marking Australia’s ‘best’ IPO for around three years.
The stock gained over 39% on its first day of dealing, hitting A$30.28 at one point and finishing trading day at $30.
Its IPO previously priced the new shares at $22 each, raising A$200 million for the themed restaurant firm to expand internationally.
The company operates more than 200 Guzman y Gomez fast-food outlets across Australia, Singapore, Japan, and the United States.
“We’re on a mission to reinvent fast food for the better, changing the way the masses eat one burrito at a time,” co-chief executive Steven marks says on the company’s investor website.
“Who said fast food has to be bad food!”
Golden Goose IPO ditched ‘because France’
Golden Goose, a luxury trainers brand, has cancelled its recently mooted stock market IPO, blaming instability in the European market.
The decision by the Venice-based sneaker brand and its British owners, private equity firm Permira, followed the recent snap election in France which has caused turmoil in European stocks.
"The significant deterioration in market conditions following European Parliament elections this month and the calling of a general election in France have impacted European markets performance and, in particular, the luxury sector," the company said in a statement.
Golden Goose had wanted to pitch its stock market valuation between €1.7 billion and €1.9 billion, making it potentially Italy's largest IPO in over a year.
The company is known for its high-priced and pre-scuffed sneakers, which sell for between $585 and $820 per pair and are a “celebrity favourite” – worn by the likes of Taylor Swift, Selena Gomez, and Reese Witherspoon.
Zilch might ‘float abroad’ instead of London IPO
Zilch, a fintech firm backed by eBay currently based in the UK, has threatened to float abroad if the next British government fails to boost the market for tech firms.
Chief executive Philip Belamant says the payments firm is holding off on listing in London until it sees evidence of government policies aimed at creating "liquidity and excitement around IPOs".
These comments came as the company landed £100 million of debt financing from Deutsche Bank.
This funding was described as a precursor for a potential IPO.
Belamant, meanwhile, is looking to see “pension funds investing in high-growth British companies” and “incentives for retail investors to buy and hold British stocks”.
“If this all happens, I’m not sure why you wouldn’t want to list on the LSE . . . But of course, if it doesn’t happen, then we have to take the appropriate decision and that might be to go somewhere else,” Belamant said in comments to the media.
London has been ailing in profile over the past year, witnessing an exodus of its mid-to-large companies – some going private, others being taken over by private equity, and others moving over to the United States in search of better valuations and stronger liquidity.
Hargreaves Lansdown got an improved takeover bid
Shares in Hargreaves Lansdown PLC (LSE:HL.) advanced around 5% higher on Tuesday, after the stockbroker said it would be willing to accept a new cash offer priced at 1,140p per share from a consortium of investors.
The buyers consisting of private equity firms CVC and Nordic Capital, along with the Abu Dhabi Investment Authority.
The FTSE 100 stockbroker and pensions firm noted that this proposed offer follows three previous approaches from the consortium in recent months – the highest prior offer of 985p per share was rejected last month.
According to the Hargreaves board the new offer "would provide the certainty of value in cash to shareholders" and, as a result, it had decided to engage with the consortium and provide access for due diligence to be carried out.
Moreover, the board indicated to the consortium that the new bid is at a value that the board would be willing to recommend unanimously to shareholders, should a formal offer be made.
The improved offer includes a 30p final dividend, with an option for shareholders to choose ‘rollover’ equity instead of cash, to co-invest in the consortium's unlisted acquisition vehicle.
Nvidia and Uber back Waabi AI trucking start-up
Waabi, an AI-driven trucking start-up backed by NVIDIA Corp (NASDAQ:NVDA, ETR:NVD) and Uber Technologies Inc (NYSE:UBER, ETR:UT8), has drummed up $200 million of new funds via a Series B round.
Porsche and Volvo were also among the other big-names reportedly backing the firm through the oversubscribed investment round.
Proceeds are expected to help Waabi launch its fully driverless trucks in Texas, as soon as next year.
Waabi is taking a different route to autonomous driving to the likes of Tesla, as it the start-up is using generative AI systems.
The startup says its technology “on the verge of Level 4 autonomy”, within just three years since the company’s inception.
‘Level 4’ is seen as a major threshold for automomous driving, it means that the system is able to intervene with action itself if something unexpected happens, whereas at Level 3 human drivers must remain attentive, watch the road and supervise the vehicle.
At Level 4, it is predicted that vehicles could travel with minimal human oversight or supervision. There is a fifth level, in which there would be zero need for human drivers to be present at all.
“Waabi has pioneered a single end-to-end AI system that is capable of human-like reasoning, enabling it to generalize to any situation that might happen on the road, including those it has never seen before,” the company said in a statement.
“Because it is able to reason, the system requires significantly less training data and compute resources compared to other end-to-end approaches.”
Nvidia chief executive Jensen Huang added: “Waabi is developing autonomous trucking by applying cutting-edge generative AI to the physical world.
“I’m excited to support Raquel’s vision through our investment in Waabi, which is powered by NVIDIA technology.”